FTG's Circuits Segment Sales Up 19% in 2Q19

Firan Technology Group Corporation today announced financial results for the second quarter 2019.

Achieved sales of $32.2M, a 12% increase over Q2 2018 and the highest quarterly revenue in the company’s history

Achieved Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $5.2M in Q2 2019, an increase of $1.8M or 54% over Q2 last year

Achieved trailing twelve month EBITDA of $13.8M

Achieved net income of $2.5M and diluted earnings per share of $0.10 in Q2 2019, a $1.1M or 88% increase over Q2 2018

In March 2019, FTG announced it had entered into a definitive purchase agreement to acquire a US based printed circuit board manufacturer, subject to approval of the Committee on Foreign Investment in the United States (CFIUS) and other customary closing conditions. Subsequent to quarter end, the CFIUS approval was received. Closing is expected to take place in the near future.

Achieved quarterly cash flow of $2.3M in Q2 2019 after additions to plant and equipment

Net debt at quarter end was $2.2M, the lowest level since 2015 and represent the full repayment of debt assumed to pay for the acquisitions in 2016

“The second quarter of 2019 was a great quarter for FTG with record sales, EBITDA and operating profit. There was strong performance across the Corporation showing the strategic initiatives from previous years including the acquisitions in 2016 to drive up utilization and the investments in China which have created value for the Corporation,” stated Brad Bourne, president and chief executive officer. He added, “We are excited about our pending acquisition which will add much needed capacity for standard circuit board manufacturing freeing up capacity in existing sites for higher end product and expand our offering for the US defense market.”

Business Highlights

FTG accomplished many goals in Q2 2019 that continue to improve the Corporation and position it for the future, including:

Achieved record quarterly sales of $32.2M

Achieved Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $5.2M in Q2 2019, an increase of $1.8M or 54% over Q2 last year over Q2 last year

Achieved net income of $2.5M and diluted earnings per share of $0.10 in Q2 2019, a $1.1M or 88% increase over Q2 2018

Achieved quarterly cash flow of $2.3M in Q2 2019 after additions to plant and equipment

Net debt at quarter end was $2.2M, the lowest level since 2015 and represent the full repayment of debt assumed to pay for the acquisitions in 2016.

In March 2019, FTG announced it has entered into a definitive agreement to acquire a US based circuit board manufacturer – to add capacity in the Circuits business and to enable FTG to offer standard circuit board product to US based defense contractors. The acquisition was conditional upon approval of the Committee on Foreign Investment in the United States (CFIUS) and other customary closing conditions. Subsequent to quarter end the CFIUS approval was obtained.

For FTG, overall sales increased by $3.4M or 11.6% from $28.9M in Q2 2018 to $32.2M in Q2 2019. Both the circuits and aerospace segments contributed to the growth. The Canadian dollar was 5.5 cents weaker in Q2 2019 compared to the same quarter last year and this contributed approximately $1.5M to the growth. Year-to-date 2019 sales increased by $1.2M or 2.2%. Year-to-date 2018 included $5M one-time adjustment with respect to the C919 development contract. Excluding this, the growth was $6.2M or 12%.

The circuits segment sales in Q2 2019 were $19.3M, up $3.1M or 18.9% versus Q2 2018. Both North American sites experienced similar growth rates. Activity in China was approximately $1.1M and is reported in the Circuits Toronto sales as all orders flow through the Toronto site.

For the Aerospace segment, sales in Q2 2019 were $13.0M compared to $12.7M in Q2 of last year. Aerospace Toronto and Tianjin were up whereas Aerospace Chatsworth was down compared to the same quarter last year. On a year-to-date basis, sales were down $2.9M but excluding the one-time adjustment on the C919 development program, sales were up $2.1M or 9.8%

Gross margins of $9.7M in Q2 2019 were up $2.5M compared to Q2 2018. The increase is due to higher sales, improved operating performance, more favorable exchange rates, offset by some one-time costs in the quarter. For the year-to-date, gross margins were $16.5M, up $4.4M or 36.2%. Year-to-date gross margins are 28.6% compared to 21.4% last year. The one-time $5M revenue adjustment on the C919 program last year was at very low margins. Operating performance in 2019 was improved across the Corporation.

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FTG's Circuits Segment Sales Up 19% in 2Q19

Firan Technology Group Corporation today announced financial results for the second quarter 2019.

Achieved sales of $32.2M, a 12% increase over Q2 2018 and the highest quarterly revenue in the company’s history

Achieved Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $5.2M in Q2 2019, an increase of $1.8M or 54% over Q2 last year

Achieved trailing twelve month EBITDA of $13.8M

Achieved net income of $2.5M and diluted earnings per share of $0.10 in Q2 2019, a $1.1M or 88% increase over Q2 2018

In March 2019, FTG announced it had entered into a definitive purchase agreement to acquire a US based printed circuit board manufacturer, subject to approval of the Committee on Foreign Investment in the United States (CFIUS) and other customary closing conditions. Subsequent to quarter end, the CFIUS approval was received. Closing is expected to take place in the near future.

Achieved quarterly cash flow of $2.3M in Q2 2019 after additions to plant and equipment

Net debt at quarter end was $2.2M, the lowest level since 2015 and represent the full repayment of debt assumed to pay for the acquisitions in 2016

“The second quarter of 2019 was a great quarter for FTG with record sales, EBITDA and operating profit. There was strong performance across the Corporation showing the strategic initiatives from previous years including the acquisitions in 2016 to drive up utilization and the investments in China which have created value for the Corporation,” stated Brad Bourne, president and chief executive officer. He added, “We are excited about our pending acquisition which will add much needed capacity for standard circuit board manufacturing freeing up capacity in existing sites for higher end product and expand our offering for the US defense market.”

Business Highlights

FTG accomplished many goals in Q2 2019 that continue to improve the Corporation and position it for the future, including:

Achieved record quarterly sales of $32.2M

Achieved Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $5.2M in Q2 2019, an increase of $1.8M or 54% over Q2 last year over Q2 last year

Achieved net income of $2.5M and diluted earnings per share of $0.10 in Q2 2019, a $1.1M or 88% increase over Q2 2018

Achieved quarterly cash flow of $2.3M in Q2 2019 after additions to plant and equipment

Net debt at quarter end was $2.2M, the lowest level since 2015 and represent the full repayment of debt assumed to pay for the acquisitions in 2016.

In March 2019, FTG announced it has entered into a definitive agreement to acquire a US based circuit board manufacturer – to add capacity in the Circuits business and to enable FTG to offer standard circuit board product to US based defense contractors. The acquisition was conditional upon approval of the Committee on Foreign Investment in the United States (CFIUS) and other customary closing conditions. Subsequent to quarter end the CFIUS approval was obtained.

For FTG, overall sales increased by $3.4M or 11.6% from $28.9M in Q2 2018 to $32.2M in Q2 2019. Both the circuits and aerospace segments contributed to the growth. The Canadian dollar was 5.5 cents weaker in Q2 2019 compared to the same quarter last year and this contributed approximately $1.5M to the growth. Year-to-date 2019 sales increased by $1.2M or 2.2%. Year-to-date 2018 included $5M one-time adjustment with respect to the C919 development contract. Excluding this, the growth was $6.2M or 12%.

The circuits segment sales in Q2 2019 were $19.3M, up $3.1M or 18.9% versus Q2 2018. Both North American sites experienced similar growth rates. Activity in China was approximately $1.1M and is reported in the Circuits Toronto sales as all orders flow through the Toronto site.

For the Aerospace segment, sales in Q2 2019 were $13.0M compared to $12.7M in Q2 of last year. Aerospace Toronto and Tianjin were up whereas Aerospace Chatsworth was down compared to the same quarter last year. On a year-to-date basis, sales were down $2.9M but excluding the one-time adjustment on the C919 development program, sales were up $2.1M or 9.8%

Gross margins of $9.7M in Q2 2019 were up $2.5M compared to Q2 2018. The increase is due to higher sales, improved operating performance, more favorable exchange rates, offset by some one-time costs in the quarter. For the year-to-date, gross margins were $16.5M, up $4.4M or 36.2%. Year-to-date gross margins are 28.6% compared to 21.4% last year. The one-time $5M revenue adjustment on the C919 program last year was at very low margins. Operating performance in 2019 was improved across the Corporation.

Net profit after tax at FTG in Q2 2019 was $2.5M compared to a net profit of $1.3M in Q2 2018. Higher margins, were partially offset by higher SG&A costs and higher foreign exchange losses. For the year-to-date, net profit was $3.7M compared to $1.0M last year.

The circuits segment net earnings before corporate and interest and other costs was $3.9M in Q2 2019 compared to $2.8M in Q2 2018.

The aerospace net earnings before corporate and interest and other costs in Q2 2019 was $0.7M versus $0.1M in Q2 2018.

As at May 31, 2019, the Corporation’s net working capital was $32.5M, an increase of $3.8M over year-end 2018. Higher accounts receivable was offset by lower accounts payable/accrued liabilities and cash.

Cash flow in Q2 2019 was $2.3M compared to $3.6M in Q2 last year, after investments in capital equipment and deferred development. In Q2 2019, cash taxes paid were $0.4M. For the year-to-date period cash flow was $0.4M compared to $3.2M last year.

Net debt to EBITDA was 0.16:1 for the trailing 12 month period.

The Corporation will host a live conference call on Thursday, July 11, 2019 at 8:30 am (EDT) to discuss the results of Q2 2019.

About Firan Technology Group Corporation

FTG is an aerospace and defense electronics product and subsystem supplier to customers around the globe. FTG has two operating units:

FTG Circuits is a manufacturer of high technology, high reliability printed circuit boards. Our customers are leaders in the aviation, defense, and high technology industries. FTG Circuits has operations in Toronto, Ontario, Chatsworth, California and a joint venture in Tianjin, China.